Big plantation firms asked to limit expansion

Big plantation firms asked to limit expansion

JAKARTA (JP): Minister of Forestry and Plantations Muslimin
Nasution has asked major plantation companies to keep on hold any
plans to expand their plantation areas to allow for development
of small and medium plantation estate firms.

"Big plantation estates should give more opportunities to
middle and small-scale plantation firms to grow. The medium and
small estates can supply the industry owned by big companies in
partnership," he said at a seminar on forestry and the people's
welfare Thursday.

Muslimin said major companies should instead support the
development of small and medium companies both financially and
technologically in a partnership program.

Under such a cooperation scheme, the major plantations would
still be able to secure the future supply of the raw materials of
their industry even though they did not expand their plantation
acreages, the minister said.

"With the scheme, big plantation companies could expand their
business without opening more plantation areas which need a lot
of money."

He added that several giant plantation companies such as those
under the Astra Group welcomed his idea and pledged to follow his
recommendations.

Muslimin said his ministry also required concessionaires whose
logging contracts had ended to transfer some part of their forest
areas to cooperatives.

"We will not extend their logging rights if the
concessionaires do not give some part of their shares to
cooperatives." He added that the government was still revising
the minimum size of the forests which should go to the
cooperatives.

Current regulations state that concessionaires must give at
least 3 percent of their forestry area to cooperatives, the
minister said.

Earlier this month, Muslimin said the government was
considering limiting corporate and personal ownership of the
country's forest concessions to prevent a concentration of forest
assets in the hands of a small number of companies.

He said a handful of business groups controlled most of the
concessions.

Forest concession rights would be issued through an open
bidding system in the future, he added, to give the public a
better chance of benefiting from the country's forest resources.

He said open bidding would apply only to areas left vacant by
suspended timber companies because the government would not open
any more natural forests to logging operations.

Minister of Cooperatives and Small Enterprises Adi Sasono, who
also addressed the seminar, suggested the government exempt the
cooperatives which owned concessions rights from the obligation
to pay reforestation funds, the resource rent tax and other
forestry levies.

"It will be very helpful for the small capital cooperatives
and small scale entrepreneurs."

At least 423 private companies are currently involved in
logging activities on 61.7 million hectares.

According to the minister's data, Kayu Lapis Indonesia Group
owned by Hunawan Widjajanto is the largest forest concession
holder. It owns 3.5 million hectares of forest concession areas
in the country, followed by Burhan Uray's Djajanti Group with 2.9
million hectares, Prajogo Pangestu's Barito Pacific Group with
2.7 million hectares and Mohamad "Bob" Hasan's Kalimanis Group
with 1.6 million hectares.

The country's six state-owned forestry companies -- PT
Inhutani I to V and Perum Perhutani -- have logging operations
spread over approximately 2.3 million hectares.

The government first began to award forest concessions to
private companies through the 1971 Forestry Law, which granted
concessionaires the sole right to cultivate and exploit forests
in their concession areas.

Last year, the government extended the length of the
concessions from 30 years to 70 years. (gis)